A life settlements investment fund, Life Settlement Assets PLC, has been listed on the London Stock Exchange’s specialist fund segment this morning, as the manager of the strategy looks to gain access to a broader cross-section of investors through a listed closed-ended vehicle.
The listing of insurance and reinsurance linked investment funds or structures on stock exchanges in order to increase the amount of investors that can access the strategy is not uncommon in ILS markets, with proponents including Markel CATCo and Blue Capital Management both having success targeting investors in this way.
Life Settlement Assets PLC is a newly formed closed-ended investment company, backed by London-based alternative investment manager Acheron Capital Limited, which has had dealings in ILS and insurance-linked strategies in the past.
Acheron used to manage its Natural Risk Fund, which invested in catastrophe bonds and reinsurance linked securities, but for this new launch its focus has switched back to life settlements, another area the firm has a history.
Life Settlement Assets PLC will target the management of portfolios of whole and partial interests in life settlement policies issued by life insurance companies, largely sourced from companies in the United States.
However the strategy itself is not new and was previously known as the Acheron Portfolio Corporation (Luxembourg) S.A., which was delisted in Luxembourg before its listing under the new company name in London today.
The firm’s investment objective will be focused on generating long-term returns for its investors through allocations made to the life settlement market and after this listing it will acquire the portfolios of the previously named Acheron Portfolio Corporation.
Acheron Capital, which was founded in 2006 by Dr. Jean-Michel Paul, will take responsibility for modelling the risks associated with the life policies invested in by Life Settlement Assets and has also devised the investment strategy for the fund.
The company is following a similar strategy to that employed by the likes of Markel CATCo, in bringing an insurance-linked investment opportunity to a stock exchange platform, in order to make investing in it simpler, broaden the range of investors it can reach, and also provide enhanced liquidity options for those allocated to the strategy.
The listing saw almost 71.1 million shares placed on the exchange, across four different share classes with each having different risk profiles, depending on the type of life insurance policies included in the portfolios.
It will be interesting to see whether by listing on the exchange Acheron and Life Settlement Assets can grow their investor base and attract new capital to the life insurance linked investments space.
The life settlements market continues to be dogged by a somewhat chequered past, after a number of bad actors tainted the reputation of this insurance linked asset class. As a result life settlements certainly aren’t for everyone, but there has been a notable effort from the market to clean up its image and make amends for previous mistakes and the assets are gaining greater profile recently.
A number of insurance-linked securities (ILS) fund managers do invest in life settlements via their life related ILS funds, however as we’ve written previously there are hurdles that need to be overcome before broader adoption of life settlements is seen across the ILS market.